Business Loan Calculator

A term loan provides a lump sum repaid in fixed EMIs over a set period, ideal for asset purchases. A working capital loan offers flexible drawdown and repayment, suited for managing day-to-day operational expenses like inventory and payroll.

Secured business loans backed by property, equipment, or inventory typically have rates 3-5% lower than unsecured loans. Lenders view collateral-backed loans as lower risk, allowing them to offer more favorable terms.

Yes, but with stricter criteria. Startups may need a strong business plan, personal guarantees from founders, collateral, or a co-signer. Government schemes like MUDRA loans also provide collateral-free funding for micro enterprises.

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) provides collateral-free credit up to 2 crore to MSEs. Lenders are more willing to approve loans under this scheme since the trust guarantees up to 85% of the loan amount.

Typical requirements include the business PAN card, GST registration certificate, IT returns for the last 2-3 years, audited financial statements, bank statements for the last 6-12 months, a detailed business plan or project report, and KYC documents of the business owners. For startups without profit history, lenders may additionally ask for a detailed revenue projection, founder resumes, and collateral documentation.

Most business loans in India are linked to an external benchmark such as the RBI repo rate or the MCLR. When the RBI changes the repo rate, your loan interest rate changes accordingly if it is a floating-rate loan. For example, a 0.25% repo rate cut typically translates to a similar reduction in your loan rate, lowering your EMI. Fixed-rate business loans are unaffected by repo rate changes but usually start at a higher rate.

Under the CGTMSE scheme, you can get collateral-free business loans of up to 2 crore for micro and small enterprises. Many NBFCs and fintech lenders also offer unsecured business loans ranging from 50,000 to 50 lakh based on business turnover and credit score. For amounts above 50 lakh without collateral, lenders typically require a strong credit profile of 750+, at least 3-5 years of business vintage, and annual turnover exceeding 50 lakh. Interest rates on unsecured loans are 3-5% higher than secured ones.

The approval time varies significantly by lender type. Public sector banks typically take 2-6 weeks due to extensive documentation and verification processes. Private sector banks like HDFC, ICICI, and Axis process loans in 1-3 weeks. NBFCs and fintech lenders like Bajaj Finserv, Lendingkart, and Kinara Capital can approve loans in 3-7 days, with some offering same-day approval for pre-approved customers. Digital-first lenders using AI-based underwriting can disburse funds within 24-48 hours for smaller loan amounts.

Mudra loans, launched by the Government of India under the Pradhan Mantri Mudra Yojana (PMMY), provide collateral-free loans of up to 10 lakh to micro enterprises and small businesses. The scheme has three categories: Shishu (up to 50,000), Kishor (50,000 to 5 lakh), and Tarun (5 lakh to 10 lakh). These loans are available through all major banks, NBFCs, and microfinance institutions. Interest rates range from 8% to 15% and no collateral or third-party guarantee is required. Over 30 crore Mudra loans have been disbursed since the scheme launched in 2015.

Yes, but options are more limited and interest rates are higher. Businesses with CIBIL scores below 650 can explore secured business loans by offering collateral such as property, fixed deposits, or machinery. Government-backed schemes like Mudra and CGTMSE do not primarily rely on credit scores for eligibility. Some NBFCs and fintech lenders use alternative credit assessment methods such as GST returns, bank statement analysis, and business cash flow evaluation, making them more accessible for borrowers with low credit scores. However, interest rates may be 3-6% higher than standard rates.

A term loan provides a lump sum amount disbursed upfront, repaid in fixed EMIs over a set period, ideal for long-term asset purchases like machinery or expansion. A cash credit facility is a flexible borrowing limit against inventory or receivables, where you pay interest only on the amount used and can draw and repay repeatedly. Cash credit is better for managing working capital gaps, while term loans suit capital expenditure. Interest rates on cash credit are typically 1-2% higher than term loans, but the flexibility of paying only on the utilized amount can make it cost-effective for seasonal businesses.